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April 18, 2011

Finland Election Could Doom Portugal Bailout

Anti-euro party quadruples power base, calls for changes

The election in Finland on Sunday has much wider repercussions than just the power structure in Helsinki. The anti-euro True Finns, a populist party opposed to the terms of European Union (EU) bailout agreed upon for Portugal, swept into third place in the country's government, quadrupling its share of the popular vote to do so. Its leader Timo Soini has called for changes in Portugal's bailout plan.

According to Reuters, while the center-right National Coalition party won the election with 20.4% of the vote, the True Finns swept into third place on a burgeoning 19%; the True Finns now expect to be included in talks on forming the post-election government. In 2007, the party only captured 4.1%.

Unlike other euro zone nations, Finland's parliament has the right to vote on EU requests for bailout funds. That leaves the euro zone in a somewhat precarious position, since Finland could hold up any progress on the group's debt situation. Soini was quoted in the report as telling public broadcaster YLE, "The package that is there. I do not believe it will remain," referring to Portugal.

The vote reflects mounting frustration among the more prosperous of euro zone countries about having to pour so much money into weaker states, from Portugal to Greece to Ireland.

Jyrki Katainen of the National Coalition party will have his hands full in building a government; he is set to be Finland's next prime minister. He has previously served as finance minister, but now faces the more difficult task of getting the True Finns to follow his europhile lead. But Katainen may also face other opposition, such as his pro-nuclear power project stance.